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                                                                   EXHIBIT 10.58



                               SECURITY AGREEMENT


         THIS SECURITY AGREEMENT (this "Agreement") is made as of November 25,
1997 by each of the undersigned (each individually a "Debtor" and collectively,
"Debtors"), in favor of Energy Capital Investment Company PLC, an English
investment company, EnCap Equity 1994 Limited Partnership, a Texas limited
partnership, and Gecko Booty 1994 I Limited Partnership, a Texas limited
partnership (collectively, "Secured Party").

                                    RECITALS:

1.       Future Petroleum Corporation, a Utah corporation ("Buyer") has executed
         those certain promissory notes of even date herewith, payable to the
         order of Secured Party in the aggregate principal amount of $6,600,000
         (such promissory notes, as from time to time amended, and all
         promissory notes given in substitution, renewal or extension therefor
         or thereof, in whole or in part, collectively, the "Notes").

2.       The Notes were executed pursuant to a Purchase and Sale Agreement dated
         November 25, 1997 (the "Purchase Agreement"), by and between Buyer and
         Secured Party, pursuant to which Buyer has agreed to purchase from
         Secured Party all of the limited partnership interests in each of BMC
         Development No. 1 Limited Partnership and Future Acquisition 1995,
         Ltd., each a Texas limited partnership (together with their successors,
         each a "Partnership"), and all of the assets of Gecko Booty 1994 I
         Limited Partnership, and pursuant to which Secured Party has agreed to
         extend credit to Buyer under the Notes to consummate such purchase.

3.       Pursuant to the Purchase Agreement, each Partnership, Future Energy
         Corporation, a Nevada corporation ("Future Nevada"), and Future
         Petroleum Corporation, a Texas corporation ("Future Texas"), each a
         wholly-owned Subsidiary of Buyer and the sole limited and general
         partners of each Partnership, respectively, are concurrently herewith
         giving to Secured Party a Guaranty of even date herewith (as from time
         to time amended, supplemented or restated, the "Guaranty") of all of
         the indebtedness of Buyer under the Purchase Agreement and the Notes.

4.       It is a condition precedent to Secured Party's obligation to extend
         credit to Buyer pursuant to the Purchase Agreement that Debtors shall
         execute and deliver to Secured Party a satisfactory security agreement
         granting liens on and security interests in all of their assets to
         secure Debtors' obligations under the Purchase Agreement, the Notes and
         the Guaranty.

5.       Buyer owns directly (i) all of the issued and outstanding shares of
         capital stock of Future Nevada, which in turn owns a 99% limited
         partnership interest in each Partnership, and (ii) all of the issued
         and outstanding shares of capital stock of Future Texas, which in turn
         owns a 1% general partnership interest in each Partnership.

6.       Buyer, Future Nevada, Future Texas, the Partnerships and the other
         direct and indirect subsidiaries of Buyer are mutually dependent on
         each other in the conduct of their respective businesses under a
         holding company structure, with the credit needed from time to time by
         each often being provided by another or by means of financing obtained
         by one such affiliate with the support of the others for their mutual
         benefit and the ability of each to obtain such financing being
         dependent on the successful operations of the others.

7.       The board of directors of each Debtor that is a corporation, and the
         board of directors of Future Texas, as general partner of each
         Partnership, has determined that such Debtor's execution, 



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         delivery and performance of this Agreement may reasonably be expected
         to benefit such Debtor, directly or indirectly, and is in the best
         interests of such Debtor.

         NOW, THEREFORE, in consideration of the premises, of the benefits which
will inure to Debtors from Secured Party's extension of credit under the Notes,
and of Ten Dollars and other good and valuable consideration, the receipt and
sufficiency of all of which are hereby acknowledged, and in order to induce
Secured Party to extend credit under the Purchase Agreement, each Debtor hereby
agrees with Secured Party as follows:

                     ARTICLE I - Definitions and References

         Section 1.1. General Definitions. As used herein, the terms
"Agreement", "Debtor", "Secured Party", "Buyer", "Notes", "Purchase Agreement",
"Partnership", "Future Nevada", "Future Texas" and "Guaranty" shall have the
meanings indicated above, and the following terms shall have the following
meanings:

         "Collateral" means all property, of whatever type, which is described
in Section 2.1 as being at any time subject to a security interest granted
hereunder to Secured Party.

         "Documents" means all "documents" (as defined in the UCC) or other
receipts covering, evidencing or representing Inventory, Equipment, or other
goods.

         "Equipment" means all equipment (as defined in the UCC) in whatever
form, wherever located, and whether now or hereafter existing, and all parts
thereof, all accessions thereto, and all replacements therefor.

         "General Intangibles" means all general intangibles (as defined in the
UCC) of any kind (including choses in action, tax refunds, insurance proceeds,
and contract rights), and all instruments, security agreements, leases,
contracts, and other rights (except those constituting Receivables, Documents,
or Instruments) to receive payments of money or the ownership or possession of
property.

         "Instruments" means all "instruments", "chattel paper" or "letters of
credit" (as each is defined in" the UCC).

         "Inventory" means all inventory (as defined in the UCC) in all of its
forms, wherever located and whether now or hereafter existing, including (a) all
movable property and other goods held for sale or lease, all movable property
and other goods furnished or to be furnished under contracts of service, all raw
materials and work in process, and all materials and supplies used or consumed
in a business, (b) all movable property and other goods which are part of a
product or mass, (c) all movable property and other goods which are returned to
or repossessed by the seller, lessor, or supplier thereof, (d) all goods and
substances in which any of the foregoing is commingled or to which any of the
foregoing is added, and (e) all accessions to, products of, and documents for
any of the foregoing.

         "Obligation Documents" means the Purchase Agreement, the Notes, the
Guaranty, the Note Documents, and all other documents and instruments under, by
reason of which, or pursuant to which any or all of the Secured Obligations are
evidenced, governed, secured, guaranteed, or otherwise dealt with, and all other
agreements, certificates, and other documents, instruments and writings
heretofore or hereafter delivered in connection herewith or therewith.

         "Other Liable Party" means any Person, other than Debtors, who may now
or may at any time hereafter be primarily or secondarily liable for any of the
Secured Obligations or who may now or may at any time hereafter have granted to
Secured Party a Lien upon any property as security for the Secured Obligations.



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         "Proceeds" means, with respect to any property of any kind, all
proceeds of, and all other profits, products, rentals or receipts, in whatever
form, arising from any sale, exchange, collection, lease, licensing or other
disposition of, distribution in respect of, or other realization upon, such
property, including all claims against third parties for loss of, damage to or
destruction of, or for proceeds payable under (or unearned premiums with respect
to) insurance in respect of, such property (regardless of whether Secured Party
is named a loss payee thereunder), and any payments paid or owing by any third
party under any indemnity, warranty, or guaranty with respect to such property,
and any condemnation or requisition payments with respect to such property, in
each case whether now existing or hereafter arising.

         "Receivables" means (a) all accounts (as defined in the UCC) and all
other rights to payment for goods or other personal property which have been (or
are to be) sold, leased, or exchanged or for services which have been (or are to
be) rendered, regardless of whether such accounts or other rights to payment
have been earned by performance and regardless of whether such accounts or other
rights to payment are evidenced by or characterized as accounts receivable,
contract rights, book debts, notes, drafts or other obligations of indebtedness,
(b) all Documents and Instruments of any kind relating to such accounts or other
rights to payment or otherwise arising out of or in connection with the sale,
lease or exchange of goods or other personal property or the rendering of
services, (c) all rights in, to, or under all security agreements, leases and
other contracts securing or otherwise relating to any such accounts, rights to
payment, Documents, or Instruments, (d) all rights in, to and under any purchase
orders, service contracts, or other contracts out of which such accounts and
other rights to payment arose (or will arise on performance), and (e) all rights
in or pertaining to any goods arising out of or in connection with any such
purchase orders, service contracts, or other contracts, including rights in
returned or repossessed goods and rights of replevin, repossession, and
reclamation.

         "Secured Obligations" has the meaning given such term in Section 2.2.

         "UCC" means the Uniform Commercial Code in effect in the State of Texas
on the date hereof.

         Section 1.2. Incorporation of Other Definitions. Reference is hereby
made to the Purchase Agreement for a statement of the terms thereof. All
capitalized terms used in this Agreement which are defined in the Purchase
Agreement and not otherwise defined herein shall have the same meanings herein
as set forth therein. All terms used in this Agreement which are defined in the
UCC and not otherwise defined herein or in the Purchase Agreement shall have the
same meanings herein as set forth therein, except where the context otherwise
requires.

         Section 1.3. Attachments. All exhibits or schedules which may be
attached to this Agreement are a part hereof for all purposes.

         Section 1.4. Amendment of Defined Instruments. Unless the context
otherwise requires or unless otherwise provided herein, references in this
Agreement to a particular agreement, instrument or document (including, but not
limited to, references in Section 2.1) also refer to and include all renewals,
extensions, amendments, modifications, supplements or restatements of any such
agreement, instrument or document, provided that nothing contained in this
Section shall be construed to authorize any Person to execute or enter into any
such renewal, extension, amendment, modification, supplement or restatement.

         Section 1.5. References and Titles. All references in this Agreement to
Exhibits, Articles, Sections, subsections, and other subdivisions refer to the
Exhibits, Articles, Sections, subsections and other subdivisions of this
Agreement unless expressly provided otherwise. Titles appearing at the beginning
of 



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any subdivision are for convenience only and do not constitute any part of any
such subdivision and shall be disregarded in construing the language contained
in this Agreement. The words "this Agreement", "herein", "hereof", "hereby",
"hereunder" and words of similar import refer to this Agreement as a whole and
not to any particular subdivision unless expressly so limited. The phrases "this
Section" and "this subsection" and similar phrases refer only to the Sections or
subsections hereof in which the phrase occurs. The word "or" is not exclusive,
and the word "including" (in all of its forms) means "including without
limitation". Pronouns in masculine, feminine and neuter gender shall be
construed to include any other gender, and words in the singular form shall be
construed to include the plural and vice versa unless the context otherwise
requires.

                         ARTICLE II - Security Interest

         Section 2.1. Grant of Security Interest. As collateral security for all
of the Secured Obligations, each Debtor hereby pledges and assigns to Secured
Party, and grants to Secured Party a continuing security interest, in and to all
right, title and interest of each Debtor in and to any and all of the following
property, whether now owned or existing or hereafter acquired or arising and
regardless of where located:

         (a)  all Receivables.

         (b)  all General Intangibles.

         (c)  all Documents.

         (d)  all Instruments.

         (e)  all Inventory.

         (f)  all Equipment.

         (g) All books and records (including customer lists, marketing
information, credit files, price lists, operating records, vendor and supplier
price lists, sales literature, computer software, computer hardware, computer
disks and tapes and other storage media, printouts and other materials and
records) of each Debtor pertaining to any of the Collateral.

         (h) All moneys and property of any kind of any Debtor in the possession
or under the control of Secured Party.

         (i) All Proceeds of any and all of the foregoing Collateral.

In each case, the foregoing shall be covered by this Agreement, whether any
Debtor's ownership or other rights therein are presently held or hereafter
acquired and howsoever any Debtor's interests therein may arise or appear
(whether by ownership, security interest, claim or otherwise).

         Each Debtor other than Buyer and Secured Party (by its acceptance
hereof), hereby confirm that it is their intention that the security interests
granted by such Debtor hereunder not constitute a fraudulent transfer or
fraudulent conveyance for purposes of any federal or state law. To effectuate
the foregoing intention, each such Debtor and Secured Party (by its acceptance
hereof) hereby irrevocably agree and understand that, notwithstanding any other
provision of this Agreement, the Collateral granted by such Debtor hereunder
shall be limited to the maximum amount of Collateral that can be pledged without
rendering this Agreement, as it relates to such Debtor, voidable under
applicable law relating to fraudulent conveyances or fraudulent transfers, and
not for any greater amount.



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         Section 2.2. Secured Obligations. The security interest created hereby
in the Collateral constitutes continuing collateral security for all of the
following obligations, indebtedness and liabilities, whether now existing or
hereafter incurred or arising:

         (a) Purchase Agreement Indebtedness. The payment by Buyer, as and when
due and payable, of the "Obligations", as defined in the Purchase Agreement, and
of all amounts from time to time owing by Buyer under or in respect of the
Purchase Agreement, the Notes or any of the other Obligation Documents.

         (b) Guaranty Indebtedness. The payment by each Partnership, Future
Nevada and Future Texas, as and when due and payable, of all amounts from time
to time owing by such Debtor under or in respect of the Guaranty, or any of the
other Obligation Documents to which such Debtor is a party, and the due
performance by such Debtor of all of its other respective obligations under or
in respect of the Guaranty and such other Obligation Documents.

         (c) Renewals. All renewals, extensions, amendments, modifications,
supplements, or restatements of or substitutions for any of the foregoing.

         (d) Performance. The due performance and observance by each Debtor of
all of its other obligations from time to time existing under or in respect of
any of the Obligation Documents.

As used herein, the term "Secured Obligations" refers to all present and future
indebtedness, obligations and liabilities of whatever type which are described
above in this section, including any interest which accrues after the
commencement of any case, proceeding, or other action relating to the
bankruptcy, insolvency, or reorganization of any Debtor. Each Debtor hereby
acknowledges that the Secured Obligations are owed to each Secured Party and
that each Secured Party is entitled to the benefits of the Liens given under
this Agreement.

             ARTICLE III - Representations, Warranties and Covenants

         Section 3.1. Representations and Warranties. Each Debtor hereby
represents and warrants to Secured Party as follows:

         (a) Ownership Free of Liens. Each Debtor has good and marketable title
to the Collateral, free and clear of all Liens, encumbrances or adverse claims
except for the security interest created by this Agreement and the security
interests and other encumbrances expressly permitted by the Purchase Agreement.
No dispute, right of setoff, counterclaim or defense exists with respect to all
or any part of the Collateral. No effective financing statement or other
registration or instrument similar in effect covering all or any part of the
Collateral is on file in any recording office except any which have been filed
in favor of or assigned to Secured Party. None of the Collateral is in the
possession of any Person other than Debtors or Secured Party, except for
Collateral being transported in the ordinary course of business.

         (b) No Conflicts or Consents. Neither the ownership or the intended use
of the Collateral by any Debtor, nor the grant of the security interest by each
Debtor to Secured Party herein, nor the exercise by Secured Party of its rights
or remedies hereunder, will (i) conflict with any provision of (a) any Law, (b)
the organizational documents of any Debtor, or (c) any agreement, judgment,
license, order or permit applicable to or binding upon any Debtor, or (ii)
result in or require the creation of any Lien, charge or encumbrance upon any
assets or properties of any Debtor or any Restricted Person except as expressly
contemplated in the Obligation Documents. Except as expressly contemplated in
the Obligation Documents, no consent, approval, authorization or order of, and
no notice to or filing with any Tribunal or 



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third party is required in connection with the grant by each Debtor of the
security interest herein, or the exercise by Secured Party of its rights and
remedies hereunder.

         (c) Security Interest. Each Debtor has and will have at all times full
right, power and authority to grant a security interest in the Collateral to
Secured Party as provided herein, free and clear of any Lien, adverse claim, or
encumbrance, except for the security interests and other encumbrances expressly
permitted by the Purchase Agreement. This Agreement creates a valid and binding
first priority security interest in favor of Secured Party in the Collateral,
which security interest secures all of the Secured Obligations.

         (d) Perfection. The taking possession by Secured Party of all
Instruments and money constituting Collateral from time to time will perfect,
and establish the first priority of, Secured Party's security interest hereunder
in such Collateral. The filing of the financing statements delivered
concurrently herewith by each Debtor to Secured Party will perfect, and
establish the first priority (subject only to the security interests and other
encumbrances expressly permitted by the Purchase Agreement) of, Secured Party's
security interest hereunder in all other Collateral. No further or subsequent
filing, recording, registration, other public notice or other action is
necessary or desirable to perfect or otherwise continue, preserve or protect
such security interest except for continuation statements or filings described
in Section 3.2(b).

         (e) Receivables. Each Receivable represents the valid and legally
binding indebtedness of a bona fide account debtor arising from the sale or
lease by Debtors of goods or the rendition by Debtors of services and is not
subject to contra-accounts, setoffs, defenses or counterclaims by or available
to account debtors obligated on the Receivables except as disclosed to Secured
Party. Subject to adjustments made (or to be made) in the ordinary course of
business, Goods which have been delivered to, and services which have been
rendered by any Debtor to the account debtor on each such Receivable have been
accepted by such account debtor, and the amount shown as to each Receivable on
each Debtor's books is the true and undisputed amount owing and unpaid thereon,
subject only to discounts, allowances, rebates, Purchases and adjustments to
which such account debtor has a right.

         (f) General Intangibles. Each General Intangible included within the
Collateral which is material to each Debtor's business constituting a right to
collect amounts due or to become due thereunder represents the valid and legally
binding obligation of each other Person who is a party thereto or who is
otherwise stated to be obligated thereunder, subject to no contra-accounts,
setoffs, defenses, counterclaims, discounts, allowances, rebates, credits or
adjustments by or available to account debtors obligated thereon, except for
those which do not materially impair the value to such Debtor or the enforcement
by such Debtor of such General Intangibles.

         (g) Documents and Instruments. All Documents and Instruments included
within the Collateral are valid and genuine. Any such Document or Instrument has
only one original counterpart which constitutes collateral within the meaning of
the UCC or the Law of any applicable jurisdiction, and, if requested by Secured
Party, all such original counterparts (other than checks delivered in payment of
Receivables in the ordinary course of business) have been delivered into the
possession of Secured Party.

         (h) Goods. None of the Collateral which constitutes goods (i) is
covered by any Document (other than Documents which are subject hereto and have
been delivered to Secured Party), (ii) is subject to any landlord's lien or
similar Lien (other than the security interests and other encumbrances expressly
permitted by the Purchase Agreement), (iii) has been related to, attached to, or
used in connection with any real property so as to constitute a fixture upon
such real property (except for real property which is subject to a Lien in favor
of Secured Party), (iv) is now kept or is intended to be kept at any location
other than as disclosed to Secured Party in writing (except for goods in transit
in the ordinary course of each 



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Debtor's business), (v) is installed in or affixed to other goods so as to be an
accession to such other goods (unless such other goods are included in the
Collateral), or (vi) has been produced in violation of the Fair Labor Standards
Act, as amended. All such goods are insured to the extent required under the
Purchase Agreement.

         Section 3.2. General Covenants Applicable to All Collateral. Unless
Secured Party shall otherwise consent in writing, each Debtor will at all times
comply with the covenants contained in this Section 3.2 from the date hereof and
so long as any part of the Secured Obligations is outstanding.

         (a) Change of Name, Location, or Structure; Additional Filings. Each
Debtor recognizes that financing statements pertaining to the Collateral have
been or may be filed where such Debtor maintains any Collateral, has its records
concerning any Collateral or has its chief executive office or chief place of
business. Without limitation of any other covenant herein, no Debtor will cause
or permit any change to be made in its name, identity or organizational
structure, or any change to be made to a jurisdiction other than as represented
in Section 3.1 hereof in (i) the location of any Collateral (except with respect
to Equipment which may be relocated within the original filing jurisdiction
applicable thereto), (ii) the location of any records concerning any Collateral
or (iii) in the location of its chief executive office or principal place of
business, unless such Debtor shall have first (1) notified Secured Party of such
change at least thirty (30) days prior to the effective date of such change, (2)
taken all action requested by Secured Party (under the following subsection (b)
or otherwise) for the purpose of further confirming and protecting Secured
Party's security interests and rights under this Agreement and the perfection
and priority thereof, and (3) if requested by Secured Party, provide to Secured
Party a legal opinion to its satisfaction confirming that such change will not
adversely affect in any way Secured Party's security interests and rights under
this Agreement or the perfection or priority thereof. In any notice furnished
pursuant to this subsection, each Debtor will expressly state that the notice is
required by this Agreement and contains facts that may require additional
filings of financing statements or other notices for the purposes of continuing
perfection of Secured Party's security interest in the Collateral.

         (b) Further Assurances. Each Debtor will, at its expense as from time
to time reasonably requested by Secured Party, promptly execute and deliver all
further instruments, agreements, filings and registrations, and take all further
action that may be necessary or that Secured Party may in good faith request in
order: (i) to confirm and validate this Agreement and Secured Party's rights and
remedies hereunder, (ii) to correct any errors or omissions in the descriptions
herein of the Secured Obligations or the Collateral or in any other provisions
hereof, (iii) to perfect, register and protect the security interests and rights
created or purported to be created hereby and the first priority of such
security interests and rights, (iv) to enable Secured Party to exercise and
enforce its rights and remedies hereunder in respect of the Collateral, or (v)
to otherwise give Secured Party the full benefits of the rights and remedies
described in or granted under this Agreement. As part of the foregoing each
Debtor will, whenever reasonably requested by Secured Party (1) execute and file
any financing statements, continuation statements, and other filings or
registrations relating to Secured Party's security interests and rights
hereunder, and any amendments thereto, (2) mark its books and records relating
to any Collateral to reflect that such Collateral is subject to this Agreement
and the security interests hereunder and (3) deliver to Secured Party (upon
request, to the extent not otherwise required hereunder to be delivered without
request) all originals of chattel paper, Documents or Instruments which are from
time to time included in the Collateral. Upon the occurrence and during the
continuation of a Default, to the extent requested by Secured Party from time to
time, each Debtor will obtain from any material account debtor or other obligor
on the Collateral the acknowledgment of such account debtor or obligor that such
Collateral is subject to this Agreement.

         (c) Inspection and Information. Each Debtor will keep adequate records
concerning the Collateral and will permit Secured Party and all representatives
appointed by Secured Party, including independent accountants, agents,
attorneys, appraisers and any other persons, to inspect any of the 



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Collateral and the books and records of or relating to the Collateral at any
time during normal business hours, and to make photocopies and photographs
thereof, and to write down and record any information as such representatives
shall obtain. Upon request from time to time by Secured Party, each Debtor will
furnish to Secured Party (i) any information concerning any covenant, provision
or representation contained herein or any other matter in connection with the
Collateral or such Debtor's business, properties, or financial condition, and
(i) statements and schedules identifying and describing the Collateral and other
reports and information requested in connection with the Collateral, all in
reasonable detail.

         (d) Ownership, Liens, Possession and Transfers. Each Debtor will
maintain good and marketable title to all Collateral, free and clear of all
Liens, encumbrances or adverse claims except for the security interest created
by this Agreement and Liens permitted under the Purchase Agreement, and no
Debtor will grant or allow any such Liens, encumbrances or adverse claims to
exist. No Debtor will grant or allow to remain in effect, and each Debtor will
cause to be terminated, any financing statement or other registration or
instrument similar in effect covering all or any part of the Collateral, except
any which have been filed in favor of (or assigned to) Secured Party. Each
Debtor will defend Secured Party's right, title and special property and
security interest in and to the Collateral against the claims of any Person.
Each Debtor (i) will insure that all of the Collateral -- whether goods,
Documents, Instruments, or otherwise -- is and remains in the possession of such
Debtor or Secured Party (or a bailee selected by Secured Party who is holding
such Collateral for the benefit of Secured Party), except for goods being
transported in the ordinary course of business, and (ii) will not sell, assign
(by operation of Law or otherwise), transfer, exchange, lease or otherwise
dispose of any of the Collateral except in the ordinary course of business.

         (e) Impairment of Security Interest. No Debtor will take or fail to
take any action which would in any manner impair the value or enforceability of
Secured Party's first priority security interest in any Collateral.

         (f)  Insurance.

                  (i) Each Debtor will, at its own expense, maintain insurance
         with respect to all Collateral which constitutes goods in such amounts,
         against such risks, in such form and with such insurers, as shall be
         required under the Purchase Agreement. Each policy for liability
         insurance shall provide for all losses to be paid on behalf of Secured
         Party and the Debtor that owns the Collateral as their respective
         interests may appear, and each policy for property damage insurance
         shall provide for all losses to be paid directly to Secured Party. Each
         such policy shall in addition (A) name the Debtor who owns the
         Collateral and Secured Party as insured parties thereunder (without any
         representation or warranty by or obligation upon Secured Party) as
         their interests may appear, (B) contain the agreement by the insurer
         that any loss thereunder shall be payable to Secured Party
         notwithstanding any action, inaction or breach of representation or
         warranty by such Debtor, (C) do not provide any recourse against
         Secured Party for payment of premiums or other amounts with respect
         thereto and (D) provide that at least thirty (30) days' prior written
         notice of cancellation or of lapse shall be given to Secured Party by
         the insurer. Each Debtor will, if so requested by Secured Party,
         deliver to Secured Party original or duplicate policies of such
         insurance and, as often as Secured Party may reasonably request, a
         report of a reputable insurance broker with respect to such insurance.
         Each Debtor will also, at the request of Secured Party, duly execute
         and deliver instruments of assignment of such insurance policies and
         cause the respective insurers to acknowledge notice of such assignment.

                  (ii) Reimbursement under any liability insurance maintained by
         any Debtor pursuant to this Section 3.2(f) may be paid directly to the
         Person who has incurred the loss or damage covered by such insurance.
         With respect to any loss involving damage to Collateral which
         constitutes goods as to which subsection (iii) of this Section 3.2(f)
         is not applicable, each Debtor will make or 



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         cause to be made the necessary repairs to or replacements of such
         Collateral owned by it, and any proceeds of insurance maintained by any
         Debtor pursuant to this Section 3.2(f) shall be paid to such Debtor by
         Secured Party as reimbursement for the costs of such repairs or
         replacements as such repairs or replacements are made or acquired.

                  (iii) Upon the occurrence and during the continuance of an
         Event of Default or upon the occurrence of a loss in excess of $50,000
         per occurrence of any Collateral which constitutes goods, all insurance
         payments in respect of such Collateral shall be paid to Secured Party
         and applied as specified in Section 4.3 hereof.

         Section 3.3. Covenants for Specified Types of Collateral. Unless
Secured Party shall otherwise consent in writing, each Debtor will at all times
comply with the covenants contained in this Section 3.3 from the date hereof and
so long as any part of the Secured Obligations is outstanding.

         (a) Receivables. Each Debtor will, except as otherwise provided in
Sections 4.1(e) or 4.2(a), collect at its own expense all amounts due or to
become due under each Receivable which is included within the Collateral. In
connection with such collections, each Debtor may (and, upon the occurrence and
during the continuance of a Default, at Secured Party's direction, will) take
such action (not otherwise forbidden hereunder) as such Debtor (or, upon the
occurrence and during the continuance of a Default, Secured Party) may deem
necessary or advisable to enforce collection or performance of each such
Receivable. Except for actions and omissions in the ordinary course of business
which do not in the aggregate cause losses or reductions in excess of five
percent (5%) of the aggregate face amount of all such Receivables outstanding at
any time, each Debtor (i) will duly perform and cause to be performed all of its
obligations with respect to the goods or services, the sale or lease or
rendering of which gave rise or will give rise to each such Receivable, and (ii)
will not (whether through failure to duly perform its obligations under any
contracts, instruments, and agreements which are related to any such Receivable,
or by any written instrument, or otherwise) take or allow any action or omission
which causes any such Receivable to become subject to any contra-accounts,
setoffs, defenses, counterclaims, discounts, allowances, rebates, credits or
adjustments by or available to account debtors obligated on such Receivable.

         (b) General Intangibles. Each Debtor will, except as otherwise provided
in Sections 4.1(e) or 4.2(a), collect at its own expense all amounts due or to
become due under each General Intangible included within the Collateral. In
connection with such collections, each Debtor may (and, upon the occurrence and
during the continuance of a Default, at Secured Party's direction, will) take
such action (not otherwise forbidden hereunder) as such Debtor (or, upon the
occurrence and during the continuance of a Default, Secured Party) may deem
necessary or advisable to enforce collection or performance of each such General
Intangible. Each Debtor will duly perform and cause to be performed all of its
obligations under any contracts, instruments, and agreements which are, or which
are related to, any General Intangibles of such Debtor. No Debtor will (whether
through failure to duly perform its obligations under any contracts,
instruments, and agreements which are related to any such General Intangibles,
or by any written instrument, or otherwise) take or allow any action or omission
which causes any such General Intangibles to become subject to any
contra-accounts, setoffs, defenses, counterclaims, discounts, allowances,
rebates, credits or adjustments by or available to account debtors obligated on
such General Intangibles, except for those which (i) in the case of such General
Intangibles under which money is owing to such Debtor, do not in the aggregate
exceed five percent (5%) of the aggregate face amount of all such General
Intangibles owing to such Debtor, and (ii) in the case of other General
Intangibles included within the Collateral, do not materially impair the value
or enforcement of such General Intangibles.

         (c) Documents and Instruments. Each Debtor will at all times cause any
Documents or Instruments which are included within the Collateral to be valid
and genuine. Each Debtor will cause all 



                                      -9-
<PAGE>   10

Instruments included within the Collateral to have only one original
counterpart. If requested by Secured Party, each Debtor will promptly deliver to
Secured Party all originals of Documents or Instruments which are included
within the Collateral. No Debtor will (whether through failure to duly perform
its obligations under any contracts, instruments, and agreements which are
related to any Documents or Instruments which are included within the
Collateral, or by any written instrument, or otherwise) take or allow any action
or omission which causes any Documents or Instruments which are included within
the Collateral to become subject to any contra-accounts, setoffs, defenses,
counterclaims, discounts, allowances, rebates, credits or adjustments by or
available to the Persons obligated thereon. Upon request by Secured Party, each
Debtor will mark each chattel paper which is included within the Collateral with
a legend indicating that such chattel paper is subject to the security interest
granted by this Agreement.

         (d) Inventory. Each Debtor will maintain, preserve, protect and store
all Inventory included within the Collateral in good condition, repair and
working order and in a manner which will not make void or cancelable any
insurance with respect to such Collateral. Each Debtor will promptly furnish to
Secured Party a statement respecting any loss or damage to any such Inventory
with an aggregate value in excess of $50,000. Except for transportation of
Inventory in the ordinary course of business, no Debtor will allow any such
Inventory to be located in any jurisdiction other than those in which is filed
an effective financing statement which perfects Secured Party's security
interest hereunder in such Inventory. Except for Documents delivered into the
possession of Secured Party, no Debtor will allow any Inventory included within
the Collateral to be covered by any Document. Except for transportation and
storage of Inventory in the ordinary course of business, no Debtor will cause or
permit the removal of any item of Inventory from such Debtor's possession,
control and risk of loss, and no Debtor will sell, assign (by operation of Law
or otherwise), transfer, exchange, lease or otherwise dispose of any Inventory,
other than in connection with the following:

                  (i) Sales or leases, other than during the continuance of an
         Event of Default, of Inventory in the ordinary course of business, and

                  (ii) Possession of Inventory by Secured Party or by a bailee
         selected by Secured Party who is holding such Inventory for the benefit
         of Secured Party.

         (e) Equipment. Each Debtor will maintain, preserve, protect and keep
all Equipment included within the Collateral in good condition, repair and
working order, ordinary wear and tear excepted, and will cause such Equipment to
be used and operated in a good and workmanlike manner, in accordance with
applicable Law and in a manner which will not make void or cancelable any
insurance with respect to such Equipment. Each Debtor will promptly make or
cause to be made all repairs, replacements and other improvements to or in
connection with such Equipment which are necessary or desirable or that Secured
Party may request to such end. Each Debtor will promptly furnish to Secured
Party a statement respecting any loss or damage to any of such Equipment with an
aggregate value in excess of $50,000. Except for transportation of Equipment in
the ordinary course of business, no Debtor will allow any Equipment included
within the Collateral to be located in any jurisdiction other than those in
which is filed an effective financing statement which perfects Secured Party's
security interest hereunder in such Equipment. No Debtor will cause or permit
the removal of any item of Equipment from such Debtor's possession, control and
risk of loss, and no Debtor will sell, assign (by operation of Law or
otherwise), transfer, exchange, lease or otherwise dispose of any Equipment,
other than in connection with the following:

                  (i) Sale or other disposal, other than during the continuance
         of an Event of Default, of any item of Equipment which is worn out or
         obsolete or which has been replaced by an item of equal suitability and
         value, owned by such Debtor and made subject to the security interest
         under this Agreement, but which is otherwise free and clear of any
         Liens, encumbrances or adverse claims, and



                                      -10-
<PAGE>   11

                  (ii) Possession of Equipment by Secured Party or by a bailee
         selected by Secured Party who is holding such Equipment for the benefit
         of Secured Party.

No Debtor will permit any of the Collateral which constitutes Equipment to at
any time become so related to attached to, or used in connection with any
particular real property so as to become a fixture upon such real property, or
to be installed in or affixed to other goods so as to become an accession to
such other goods unless such other goods are also included in the Collateral.

         (f) Certificates of Title. To the extent that there is at any time any
Collateral in which a security interest may be perfected by a notation on the
certificate of title or similar evidence of ownership of such Collateral, each
Debtor will:

                  (i) concurrently with the execution hereof, with respect to
         any items of such Collateral with a book value in excess of $50,000 in
         which such Debtor presently has any interest,

                  (ii) promptly after the acquisition thereof, with respect to
         any items of such Collateral with a book value in excess of $50,000 in
         which such Debtor hereafter acquires any interest, and

                  (iii) promptly upon request by Secured Party, with respect to
         any other items of such Collateral,

deliver to Secured Party all such certificates of title and similar evidences of
ownership, all applications therefor, and all other documents needed or helpful
in registering Secured Party's security interest in such Collateral on such
certificates of title, other evidences of ownership, and applications and in
otherwise perfecting Secured Party's security interest in such Collateral.

                ARTICLE IV. - Remedies, Powers and Authorizations

         Section 4.1.  Normal Provisions Concerning the Collateral.

         (a) Additional Financing Statement Filings. Each Debtor hereby
authorizes Secured Party to file, without the signature of such Debtor where
permitted by Law, one or more financing or continuation statements, and
amendments thereto, relating to the Collateral. Each Debtor further agrees that
a carbon, photographic or other reproduction of this Agreement or any financing
statement describing any Collateral is sufficient as a financing statement and
may be filed in any jurisdiction by Secured Party may deem appropriate.

         (b) Power of Attorney. Each Debtor hereby irrevocably appoints Secured
Party as such Debtor's attorney-in-fact and proxy, with full authority in the
place and stead of such Debtor and in the name of such Debtor or otherwise, from
time to time in Secured Party's discretion, upon the occurrence and during the
continuance of a Default, to take any action, and to execute or indorse any
instrument, certificate or notice, which Secured Party may deem necessary or
advisable to accomplish the purposes of this Agreement including any action or
instrument: (i) to obtain and adjust any insurance required to be paid to
Secured Party pursuant hereto; (ii) to ask, demand, collect, sue for, recover,
compound, receive and give acquittance and receipts for moneys due and to become
due under or in respect of any of the Collateral; (iii) to receive, indorse and
collect any drafts or other Instruments or Documents; (iv) to enforce any
obligations included among the Collateral; and (v) to file any claims or take
any action or institute any proceedings which Secured Party may deem necessary
or desirable for the collection of any of the Collateral or otherwise to
enforce, perfect, or establish the priority of the rights of such Debtor or
Secured 



                                      -11-
<PAGE>   12

Party with respect to any of the Collateral. Each Debtor hereby acknowledges
that such power of attorney and proxy are coupled with an interest, are
irrevocable, and are to be used by Secured Party.

         (c) Performance by Secured Party. If any Debtor fails to perform any
agreement or obligation contained herein, Secured Party may itself perform, or
cause performance of, such agreement or obligation, and the expenses of Secured
Party incurred in connection therewith shall be payable by such Debtor under
Section 4.5.

         (d) Bailees. If at any time any Debtor surrenders possession or control
of any Collateral to any warehouseman, bailee or any of such Debtor's agents or
processors, such Debtor shall, upon the request of Secured Party, notify such
warehouseman, bailee, agent or processor of Secured Party's rights hereunder and
instruct such Person to hold all such Collateral for Secured Party's account
subject to Secured Party's instructions. (No such request by Secured Party shall
be deemed a waiver of any provision hereof which was otherwise violated by such
Collateral being held by such Person prior to such instructions by such Debtor.)

         (e) Collection Rights. Secured Party shall have the right at any time,
upon the occurrence and during the continuance of a Default or an Event of
Default, to notify (or to require Debtors to notify) any and all obligors under
any Receivables, General Intangibles, Instruments or other rights to payment
included among the Collateral of the assignment thereof to Secured Party under
this Agreement and to direct such obligors to make payment of all amounts due or
to become due to any Debtor thereunder directly to Secured Party and, upon such
notification and at the expense of such Debtor and to the extent permitted by
Law, to enforce collection of any such Receivables, General Intangibles,
Instruments or other rights to payment and to adjust, settle or compromise the
amount or payment thereof, in the same manner and to the same extent as such
Debtor could have done. After any Debtor receives notice that Secured Party has
given (and after Secured Party has required such Debtor to give) any notice
referred to above in this subsection:

                  (i) all amounts and proceeds (including instruments and
         writings) received by such Debtor in respect of such Receivables,
         General Intangibles, Instruments or other rights to payment shall be
         received in trust for the benefit of Secured Party hereunder, shall be
         segregated from other funds of such Debtor and shall be forthwith paid
         over to Secured Party in the same form as so received (with any
         necessary indorsement) to be, at Secured Party's discretion, either (A)
         held as cash collateral and released to such Debtor upon the remedy of
         all Defaults and Events of Default, or (B) if any Event of Default
         shall have occurred and be continuing, applied as specified in Section
         4.3, and

                  (ii) such Debtor will not adjust, settle or compromise the
         amount or payment of any such Receivable, General Intangible,
         Instrument or other right to payment or release wholly or partly any
         account debtor or obligor thereof or allow any credit or discount
         thereon.

         Section 4.2. Event of Default Remedies. If an Event of Default shall
have occurred and be continuing, Secured Party may from time to time in its
discretion, without limitation and without notice except as expressly provided
below:

         (a) exercise in respect of the Collateral, in addition to any other
rights and remedies provided for herein, under the other Obligation Documents,
or otherwise available to it, all the rights and remedies of a secured party on
default under the UCC (whether or not the UCC applies to the affected
Collateral);

         (b) require each Debtor to, and each Debtor hereby agrees that it will
at its expense and upon request of Secured Party promptly, assemble all or part
of the Collateral as directed by Secured Party and 



                                      -12-
<PAGE>   13

make it (together with all books, records and information of such Debtor
relating thereto) available to Secured Party at a place to be designated by
Secured Party which is reasonably convenient to both parties;

         (c) prior to the disposition of any Collateral, (i) to the extent
permitted by applicable Law, enter, with or without process of Law and without
breach of the peace, any premises where any of the Collateral is or may be
located, and without charge or liability to Secured Party seize and remove such
Collateral from such premises, (ii) have access to and use the Company's books,
records, and information relating to the Collateral, and (iii) store or transfer
any of the Collateral without charge in or by means of any storage or
transportation facility owned or leased by any Debtor, process, repair or
recondition any of the Collateral or otherwise prepare it for disposition in any
manner and to the extent Secured Party deems appropriate and, in connection with
such preparation and disposition, use without charge any copyright, trademark,
trade name, patent or technical process used by any Debtor;

         (d) reduce its claim to judgment or foreclose or otherwise enforce, in
whole or in part, the security interest created hereby by any available judicial
procedure;

         (e) dispose of, at its office, on the premises of any Debtor or
elsewhere, all or any part of the Collateral, as a unit or in parcels, by public
or private proceedings, and by way of one or more contracts (it being agreed
that the sale of any part of the Collateral shall not exhaust Secured Party's
power of sale, but sales may be made from time to time, and at any time, until
all of the Collateral has been sold or until the Secured Obligations have been
paid and performed in full), and at any such sale it shall not be necessary to
exhibit any of the Collateral;

         (f) buy (or allow one or more Secured Party to buy) the Collateral, or
any part thereof, at any public sale;

         (g) buy (or allow one or more Secured Party to buy) the Collateral, or
any part thereof, at any private sale if the Collateral is of a type customarily
sold in a recognized market or is of a type which is the subject of widely
distributed standard price quotations; and

         (h) apply by appropriate judicial proceedings for appointment of a
receiver for the Collateral, or any part thereof, and each Debtor hereby
consents to any such appointment.

Each Debtor agrees that, to the extent notice of sale shall be required by Law,
at least five (5) days' notice to such Debtor of the time and place of any
public sale or the time after which any private sale is to be made shall
constitute reasonable notification. Secured Party shall not be obligated to make
any sale of Collateral regardless of notice of sale having been given. Secured
Party may adjourn any public or private sale from time to time by announcement
at the time and place fixed therefor, and such sale may, without further notice,
be made at the time and place to which it was so adjourned.

         Section 4.3. Application of Proceeds. If any Event of Default shall
have occurred and be continuing, Secured Party may in its discretion apply any
cash held by Secured Party as Collateral, and any cash proceeds received by
Secured Party in respect of any sale of, collection from, or other realization
upon all or any part of the Collateral, to any or all of the following in such
order as Secured Party may elect:

         (a) To the repayment of all costs and expenses, including reasonable
attorneys' fees and legal expenses, incurred by Secured Party in connection with
(i) the administration of this Agreement, (ii) the custody, preservation, use or
operation of, or the sale of, collection from, or other realization upon, any
Collateral, (iii) the exercise or enforcement of any of the rights of Secured
Party hereunder, or (iv) the failure of any Debtor to perform or observe any of
the provisions hereof;



                                      -13-
<PAGE>   14

         (b) To the payment or other satisfaction of any Liens, encumbrances, or
adverse claims upon or against any of the Collateral;

         (c) To the reimbursement of Secured Party for the amount of any
obligations of any Debtor or any Other Liable Party paid or discharged by
Secured Party pursuant to the provisions of this Agreement or the other
Obligation Documents, and of any expenses of Secured Party payable by any Debtor
hereunder or under the other Obligation Documents;

         (d)  To the satisfaction of any other Secured Obligations;

         (e)  By holding the same as Collateral;

         (f) To the payment of any other amounts required by applicable Law
(including any provision of the UCC); and

         (g) By delivery to any Debtor or to whoever shall be lawfully entitled
to receive the same or as a court of competent jurisdiction shall direct.

         Section 4.4. Deficiency. In the event that the proceeds of any sale,
collection or realization of or upon Collateral by Secured Party are
insufficient to pay all Secured Obligations and any other amounts to which
Secured Party is legally entitled, each Debtor shall be liable for the
deficiency, together with interest thereon as provided in the governing
Obligation Documents or (if no interest is so provided) at such other rate as
shall be fixed by applicable Law, together with the costs of collection and the
reasonable fees of any attorneys employed by Secured Party to collect such
deficiency.

         Section 4.5. Indemnity and Expenses. In addition to, but not in
qualification or limitation of, any similar obligations under other Obligation
Documents:

         (a) EACH DEBTOR WILL INDEMNIFY SECURED PARTY FROM AND AGAINST ANY AND
ALL CLAIMS, LOSSES AND LIABILITIES GROWING OUT OF OR RESULTING FROM THIS
AGREEMENT (INCLUDING ENFORCEMENT OF THIS AGREEMENT),

WHETHER OR NOT SUCH CLAIMS, LOSSES AND LIABILITIES ARE IN ANY WAY OR TO ANY
EXTENT OWED, IN WHOLE OR PART, UNDER ANY CLAIM OR THEORY OF STRICT LIABILITY, OR
ARE CAUSED BY OR ARISING OUT OF SUCH INDEMNIFIED PARTY'S OWN NEGLIGENCE,

EXCEPT TO THE EXTENT SUCH CLAIMS, LOSSES OR LIABILITIES ARE PROXIMATELY CAUSED
BY SUCH INDEMNIFIED PARTY'S GROSS NEGLIGENCE OR WILLFUL MISCONDUCT.

         (b) Each Debtor will upon demand pay to Secured Party the amount of any
and all costs and expenses, including the fees and disbursements of Secured
Party's counsel and of any experts and agents, which Secured Party may incur in
connection with (i) the perfection and preservation of this security interest
created under this Agreement, (ii) the administration of this Agreement; (iii)
the custody, preservation, use or operation of, or the sale of, collection from,
or other realization upon, any Collateral; (iv) the exercise or enforcement of
any of the rights of Secured Party hereunder; or (v) the failure by any Debtor
to perform or observe any of the provisions hereof, except expenses resulting
from Secured Party's individual gross negligence or willful misconduct.



                                      -14-
<PAGE>   15


         Section 4.6. Non-Judicial Remedies. In granting to Secured Party the
power to enforce its rights hereunder without prior judicial process or judicial
hearing, each Debtor expressly waives, renounces and knowingly relinquishes any
legal right which might otherwise require Secured Party to enforce its rights by
judicial process. In so providing for non-judicial remedies, each Debtor
recognizes and concedes that such remedies are consistent with the usage of
trade, are responsive to commercial necessity, and are the result of a bargain
at arm's length. Nothing herein is intended, however, to prevent Secured Party
or any Debtor from resorting to judicial process at its option.

         Section 4.7. Other Recourse. Each Debtor waives any right to require
Secured Party to proceed against any other Person, to exhaust any Collateral or
other security for the Secured Obligations, to have any Other Liable Party
joined with such Debtor in any suit arising out of the Secured Obligations or
this Agreement, or to pursue any other remedy in Secured Party's power. Each
Debtor further waives any and all notice of acceptance of this Agreement and of
the creation, modification, rearrangement, renewal or extension for any period
of any of the Secured Obligations of any Other Liable Party from time to time.
Each Debtor further waives any defense arising by reason of any disability or
other defense of any Other Liable Party or by reason of the cessation from any
cause whatsoever of the liability of any Other Liable Party. Until all of the
Secured Obligations shall have been paid in full, no Debtor shall have any right
to subrogation and each Debtor waives the right to enforce any remedy which
Secured Party has or may hereafter have against any Other Liable Party, and
waives any benefit of and any right to participate in any other security
whatsoever now or hereafter held by Secured Party. Each Debtor authorizes
Secured Party, without notice or demand, without any reservation of rights
against such Debtor, and without in any way affecting such Debtor's liability
hereunder or on the Secured Obligations, from time to time to (a) take or hold
any other property of any type from any other Person as security for the Secured
Obligations, and exchange, enforce, waive and release any or all of such other
property, (b) apply the Collateral or such other property and direct the order
or manner of sale thereof as Secured Party may in its discretion determine, (c)
renew, extend for any period, accelerate, modify, compromise, settle or release
any of the obligations of any Other Liable Party in respect to any or all of the
Secured Obligations or other security for the Secured Obligations, (d) waive,
enforce, modify, amend or supplement any of the provisions of any Obligation
Document with any Person other than such Debtor, and (e) release or substitute
any Other Liable Party.

         Section 4.8. Limitation on Duty of Secured Party in Respect of
Collateral. Beyond the exercise of reasonable care in the custody thereof,
Secured Party shall have no duty as to any Collateral in its possession or
control or in the possession or control of any agent or bailee or as to the
preservation of rights against prior parties or any other rights pertaining
thereto. Secured Party shall be deemed to have exercised reasonable care in the
custody of the Collateral in its possession if the Collateral is accorded
treatment substantially equal to that which it accords its own property, and
shall not be liable or responsible for any loss or damage to any of the
Collateral, or for any diminution in the value thereof, by reason of the act or
omission of any warehouseman, carrier, forwarding agency, consignee or other
agent or bailee selected by Secured Party in good faith.

         Section 4.9. Appointment of Collateral Agents. At any time or times, in
order to comply with any legal requirement in any jurisdiction, Secured Party
may appoint any bank or trust company or one or more other Persons, either to
act as co-agent or co-agents, jointly with Secured Party, or to act as separate
agent or agents on behalf of Secured Parties, with such power and authority as
may be necessary for the effectual operation of the provisions hereof and may be
specified in the instrument of appointment. In so doing Secured Party may, in
the name and on behalf of any Debtor, give to such co-agent or separate agent
indemnities and other protections similar to those provided in Section 4.5.



                                      -15-
<PAGE>   16

                           ARTICLE V. - Miscellaneous

         Section 5.1. Notices. Any notice or communication required or permitted
hereunder shall be given as provided in the Purchase Agreement.

         Section 5.2. Amendments. No amendment of any provision of this
Agreement shall be effective unless it is in writing and signed by each Debtor
and Secured Party, and no waiver of any provision of this Agreement, and no
consent to any departure by any Debtor therefrom, shall be effective unless it
is in writing and signed by Secured Party, and then such waiver or consent shall
be effective only in the specific instance and for the specific purpose for
which given and to the extent specified in such writing.

         Section 5.3. Preservation of Rights. No failure on the part of Secured
Party to exercise, and no delay in exercising, any right hereunder or under any
other Obligation Document shall operate as a waiver thereof; nor shall any
single or partial exercise of any such right preclude any other or further
exercise thereof or the exercise of any other right. Neither the execution nor
the delivery of this Agreement shall in any manner impair or affect any other
security for the Secured Obligations. The rights and remedies of Secured Party
provided herein and in the other Obligation Documents are cumulative and are in
addition to, and not exclusive of, any rights or remedies provided by Law or
otherwise. The rights of Secured Party under any Obligation Document against any
party thereto are not conditional or contingent on any attempt by Secured Party
to exercise any of its rights under any other Obligation Document against such
party or against any other Person.

         Section 5.4. Unenforceability. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or invalidity without
invalidating the remaining portions hereof or thereof or affecting the validity
or enforceability of such provision in any other jurisdiction.

         Section 5.5. Survival of Agreements. All representations and warranties
of all Debtors herein, and all covenants and agreements herein shall survive the
execution and delivery of this Agreement, the execution and delivery of any
other Obligation Documents and the creation of the Secured Obligations.

         Section 5.6. Other Liable Parties. Neither this Agreement nor the
exercise by Secured Party or the failure of Secured Party to exercise any right,
power or remedy conferred herein or by Law shall be construed as relieving any
Other Liable Party from liability on the Secured Obligations or any deficiency
thereon. This Agreement shall continue irrespective of the fact that the
liability of any Other Liable Party may have ceased or irrespective of the
validity or enforceability of any other Obligation Document to which any Debtor
or any Other Liable Party may be a party, and notwithstanding the
reorganization, death, incapacity or bankruptcy of any Other Liable Party, and
notwithstanding the reorganization or bankruptcy or other event or proceeding
affecting any Other Liable Party.

         Section 5.7. Binding Effect and Assignment. This Agreement creates a
continuing security interest in the Collateral and (a) shall be binding on each
Debtor and its successors and permitted assigns and (b) shall inure, together
with all rights and remedies of Secured Party hereunder, to the benefit of
Secured Party and their respective successors, transferees and assigns, as
permitted by the Purchase Agreement. Without limiting the generality of the
foregoing, Secured Party may (except as otherwise provided in the Purchase
Agreement) pledge, assign or otherwise transfer any or all of their respective
rights under any or all of the Obligation Documents to any other Person, and
such other Person shall thereupon become vested with all of the benefits in
respect thereof granted to Secured Party, herein or otherwise. None of the
rights or duties of any Debtor hereunder may be assigned or otherwise
transferred without the prior written consent of Secured Party.



                                      -16-
<PAGE>   17

         Section 5.8. Termination. It is contemplated by the parties hereto that
there may be times when no Secured Obligations are outstanding, but
notwithstanding such occurrences, this Agreement shall remain valid and shall be
in full force and effect as to subsequent outstanding Secured Obligations. Upon
the satisfaction in full of the Secured Obligations, upon the termination or
expiration of the Purchase Agreement and any other commitment of Secured Party
to extend credit to Borrower, and upon written request for the termination
hereof delivered by Borrower to Secured Party, this Agreement and the security
interest created hereby shall terminate and all rights to the Collateral shall
revert to Debtors. Secured Party will thereafter, upon Debtors' request and at
Debtors' expense, (a) return to Debtors such of the Collateral in Secured
Party's possession as shall not have been sold or otherwise disposed of or
applied pursuant to the terms hereof; and (b) execute and deliver to Debtors
such documents as Debtors shall reasonably request to evidence such termination.

         SECTION 5.9. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS APPLICABLE TO
CONTRACTS MADE AND TO BE PERFORMED ENTIRELY WITHIN SUCH STATE, EXCEPT AS
REQUIRED BY MANDATORY PROVISIONS OF LAW AND EXCEPT TO THE EXTENT THAT THE
PRIORITY, PERFECTION AND THE EFFECT OF PERFECTION OR NON-PERFECTION OF THE
SECURITY INTEREST CREATED HEREUNDER, IN RESPECT OF ANY PARTICULAR COLLATERAL,
ARE GOVERNED BY THE LAWS OF A JURISDICTION OTHER THAN THE STATE OF NEW YORK.

         Section 5.10. Counterparts. This Agreement may be separately executed
in any number of counterparts, all of which when so executed shall be deemed to
constitute one and the same Agreement.

         Section 5.11. "Note Document". This Agreement is a "Note Document", as
defined in the Purchase Agreement, and, except as expressly provided herein to
the contrary, this Agreement is subject to all provisions of the Purchase
Agreement governing such Note Documents.



                                      -17-
<PAGE>   18

         IN WITNESS WHEREOF, each Debtor has caused this Agreement to be
executed and delivered this Agreement by its officer thereunto duly authorized,
as of the date first above written.

                            FUTURE PETROLEUM CORPORATION
                             a Utah corporation


                            By: /s/ B. CARL PRICE
                               -------------------------------------
                                B. Carl Price, President


                            FUTURE ENERGY CORPORATION
                              a Nevada corporation


                            By: /s/ B. CARL PRICE
                               -------------------------------------
                                B. Carl Price, President


                            FUTURE PETROLEUM CORPORATION
                             a Texas corporation


                            By: /s/ B. CARL PRICE
                               -------------------------------------
                                B. Carl Price, President


                            BMC DEVELOPMENT NO. 1 LIMITED PARTNERSHIP,
                             a Texas limited partnership
                            FUTURE ACQUISITION 1995, LTD.,
                             a Texas limited partnership

                            By:   Future Petroleum Corporation, a Texas 
                                   corporation, General Partner

                            By: /s/ B. CARL PRICE
                               -------------------------------------
                                B. Carl Price, President


Address of Debtors:

2351 West Northwest Highway
Dallas, Texas 75220
Attention: Carl Price
Telecopy: 214-350-8382



                                      -18-
<PAGE>   19

                               FINANCING STATEMENT

         This instrument is prepared and is intended to be a Financing Statement
complying with the formal requisites therefor as set forth in the Uniform
Commercial Code.

         1 The name and address of the Debtor ("Debtor") is:

                  Future Petroleum Corporation
                   a Utah corporation
                  2351 West Northwest Highway
                  Dallas, Texas 75220
                  Attention: Carl Price

         2 The name and address of the secured parties ("Secured Party") are:

                  Energy Capital Investment Company PLC
                  c/o EnCap Investments L.C.
                  1100 Louisiana, Suite 3150
                  Houston, Texas 77002
                  Attention: Colin Nisbeth

                  EnCap Equity 1994 Limited Partnership
                  c/o EnCap Investments L.C.
                  1100 Louisiana, Suite 3150
                  Houston, Texas 77002
                  Attention: Colin Nisbeth

                  Gecko Booty 1994 I Limited Partnership
                  c/o EnCap Investments L.C.
                  1100 Louisiana, Suite 3150
                  Houston, Texas 77002
                  Attention: Colin Nisbeth

         3 This Financing Statement covers the following types or items of
property (collectively, the "Collateral"):

All right, title and interest of Debtor in and to any and all of the following
property, whether now owned or existing or hereafter acquired or arising and
regardless of where located:

         (a)  all Receivables.

         (b)  all General Intangibles.

         (c)  all Documents.

         (d)  all Instruments.

         (e)  all Inventory.

         (f)  all Equipment.



                                      -1-
<PAGE>   20

         (g) All books and records (including customer lists, marketing
information, credit files, price lists, operating records, vendor and supplier
price lists, sales literature, computer software, computer hardware, computer
disks and tapes and other storage media, printouts and other materials and
records) of Debtor pertaining to any of the Collateral.

         (h) All moneys and property of any kind of Debtor in the possession or
under the control of Secured Party.

         (i) All Proceeds of any and all of the foregoing Collateral.

In each case, the foregoing shall be covered by this Agreement, whether Debtor's
ownership or other rights therein are presently held or hereafter acquired and
however Debtor's interests therein may arise or appear (whether by ownership,
security interest, claim or otherwise).

         4 This Financing Statement is presented for filing to the Secretary of
State of Utah.

                            FUTURE PETROLEUM CORPORATION
                             A Utah corporation


                            By: /s/ B. CARL PRICE
                               -------------------------------------
                                B. Carl Price, President



                                      -2-
<PAGE>   21

                               FINANCING STATEMENT

         This instrument is prepared and is intended to be a Financing Statement
complying with the formal requisites therefor as set forth in the Uniform
Commercial Code.

         1 The name and address of the Debtor ("Debtor") is:

                  Future Petroleum Corporation
                   a Utah corporation
                  2351 West Northwest Highway
                  Dallas, Texas 75220
                  Attention: Carl Price

         2 The name and address of the secured parties ("Secured Party") are:

                  Energy Capital Investment Company PLC
                  c/o EnCap Investments L.C.
                  1100 Louisiana, Suite 3150
                  Houston, Texas 77002
                  Attention: Colin Nisbeth

                  EnCap Equity 1994 Limited Partnership
                  c/o EnCap Investments L.C.
                  1100 Louisiana, Suite 3150
                  Houston, Texas 77002
                  Attention: Colin Nisbeth

                  Gecko Booty 1994 I Limited Partnership
                  c/o EnCap Investments L.C.
                  1100 Louisiana, Suite 3150
                  Houston, Texas 77002
                  Attention: Colin Nisbeth

         3 This Financing Statement covers the following types or items of
property (collectively, the "Collateral"):

All right, title and interest of Debtor in and to any and all of the following
property, whether now owned or existing or hereafter acquired or arising and
regardless of where located:

         (a)  all Receivables.

         (b)  all General Intangibles.

         (c)  all Documents.

         (d)  all Instruments.

         (e)  all Inventory.

         (f)  all Equipment.



                                      -1-
<PAGE>   22

         (g) All books and records (including customer lists, marketing
information, credit files, price lists, operating records, vendor and supplier
price lists, sales literature, computer software, computer hardware, computer
disks and tapes and other storage media, printouts and other materials and
records) of Debtor pertaining to any of the Collateral.

         (h) All moneys and property of any kind of Debtor in the possession or
under the control of Secured Party.

         (i) All Proceeds of any and all of the foregoing Collateral.

In each case, the foregoing shall be covered by this Agreement, whether Debtor's
ownership or other rights therein are presently held or hereafter acquired and
however Debtor's interests therein may arise or appear (whether by ownership,
security interest, claim or otherwise).

         4 This Financing Statement is presented for filing to the Secretary of
State of Texas.

                            FUTURE PETROLEUM CORPORATION
                             A Utah corporation


                            By: /s/ B. CARL PRICE
                               -------------------------------------
                                B. Carl Price, President



                                      -2-
<PAGE>   23

                               FINANCING STATEMENT

         This instrument is prepared and is intended to be a Financing Statement
complying with the formal requisites therefor as set forth in the Uniform
Commercial Code.

         1 The name and address of the Debtor ("Debtor") is:

                  Future Energy Corporation
                   a Nevada corporation
                  2351 West Northwest Highway
                  Dallas, Texas 75220
                  Attention: Carl Price

         2 The name and address of the secured parties ("Secured Party") are:

                  Energy Capital Investment Company PLC
                  c/o EnCap Investments L.C.
                  1100 Louisiana, Suite 3150
                  Houston, Texas 77002
                  Attention: Colin Nisbeth

                  EnCap Equity 1994 Limited Partnership
                  c/o EnCap Investments L.C.
                  1100 Louisiana, Suite 3150
                  Houston, Texas 77002
                  Attention: Colin Nisbeth

                  Gecko Booty 1994 I Limited Partnership
                  c/o EnCap Investments L.C.
                  1100 Louisiana, Suite 3150
                  Houston, Texas 77002
                  Attention: Colin Nisbeth

         3 This Financing Statement covers the following types or items of
property (collectively, the "Collateral"):

All right, title and interest of Debtor in and to any and all of the following
property, whether now owned or existing or hereafter acquired or arising and
regardless of where located:

         (a)  all Receivables.

         (b)  all General Intangibles.

         (c)  all Documents.

         (d)  all Instruments.

         (e)  all Inventory.

         (f)  all Equipment.



                                      -1-
<PAGE>   24

         (g) All books and records (including customer lists, marketing
information, credit files, price lists, operating records, vendor and supplier
price lists, sales literature, computer software, computer hardware, computer
disks and tapes and other storage media, printouts and other materials and
records) of Debtor pertaining to any of the Collateral.

         (h) All moneys and property of any kind of Debtor in the possession or
under the control of Secured Party.

         (i) All Proceeds of any and all of the foregoing Collateral.

In each case, the foregoing shall be covered by this Agreement, whether Debtor's
ownership or other rights therein are presently held or hereafter acquired and
however Debtor's interests therein may arise or appear (whether by ownership,
security interest, claim or otherwise).

         4 This Financing Statement is presented for filing to the Secretary of
State of Nevada.

                            FUTURE ENERGY CORPORATION
                              A Nevada corporation


                            By: /s/ B. CARL PRICE
                               -------------------------------------
                                B. Carl Price, President



                                      -2-
<PAGE>   25

                               FINANCING STATEMENT

         This instrument is prepared and is intended to be a Financing Statement
complying with the formal requisites therefor as set forth in the Uniform
Commercial Code.

         1 The name and address of the Debtor ("Debtor") is:

                  Future Energy Corporation
                   a Nevada corporation
                  2351 West Northwest Highway
                  Dallas, Texas 75220
                  Attention: Carl Price

         2 The name and address of the secured parties ("Secured Party") are:

                  Energy Capital Investment Company PLC
                  c/o EnCap Investments L.C.
                  1100 Louisiana, Suite 3150
                  Houston, Texas 77002
                  Attention: Colin Nisbeth

                  EnCap Equity 1994 Limited Partnership
                  c/o EnCap Investments L.C.
                  1100 Louisiana, Suite 3150
                  Houston, Texas 77002
                  Attention: Colin Nisbeth

                  Gecko Booty 1994 I Limited Partnership
                  c/o EnCap Investments L.C.
                  1100 Louisiana, Suite 3150
                  Houston, Texas 77002
                  Attention: Colin Nisbeth

         3 This Financing Statement covers the following types or items of
property (collectively, the "Collateral"):

All right, title and interest of Debtor in and to any and all of the following
property, whether now owned or existing or hereafter acquired or arising and
regardless of where located:

         (a)  all Receivables.

         (b)  all General Intangibles.

         (c)  all Documents.

         (d)  all Instruments.

         (e)  all Inventory.

         (f)  all Equipment.



                                      -1-
<PAGE>   26

         (g) All books and records (including customer lists, marketing
information, credit files, price lists, operating records, vendor and supplier
price lists, sales literature, computer software, computer hardware, computer
disks and tapes and other storage media, printouts and other materials and
records) of Debtor pertaining to any of the Collateral.

         (h) All moneys and property of any kind of Debtor in the possession or
under the control of Secured Party.

         (i) All Proceeds of any and all of the foregoing Collateral.

In each case, the foregoing shall be covered by this Agreement, whether Debtor's
ownership or other rights therein are presently held or hereafter acquired and
however Debtor's interests therein may arise or appear (whether by ownership,
security interest, claim or otherwise).

         4 This Financing Statement is presented for filing to the Secretary of
State of Texas.

                            FUTURE ENERGY CORPORATION
                              A Nevada corporation


                            By: /s/ B. CARL PRICE
                               -------------------------------------
                                B. Carl Price, President



                                      -2-
<PAGE>   27

                               FINANCING STATEMENT

         This instrument is prepared and is intended to be a Financing Statement
complying with the formal requisites therefor as set forth in the Uniform
Commercial Code.

         1 The name and address of the Debtor ("Debtor") is:

                  Future Petroleum Corporation
                   a Texas corporation
                  2351 West Northwest Highway
                  Dallas, Texas 75220
                  Attention: Carl Price

         2 The name and address of the secured parties ("Secured Party") are:

                  Energy Capital Investment Company PLC
                  c/o EnCap Investments L.C.
                  1100 Louisiana, Suite 3150
                  Houston, Texas 77002
                  Attention: Colin Nisbeth

                  EnCap Equity 1994 Limited Partnership
                  c/o EnCap Investments L.C.
                  1100 Louisiana, Suite 3150
                  Houston, Texas 77002
                  Attention: Colin Nisbeth

                  Gecko Booty 1994 I Limited Partnership
                  c/o EnCap Investments L.C.
                  1100 Louisiana, Suite 3150
                  Houston, Texas 77002
                  Attention: Colin Nisbeth

         3 This Financing Statement covers the following types or items of
property (collectively, the "Collateral"):

All right, title and interest of Debtor in and to any and all of the following
property, whether now owned or existing or hereafter acquired or arising and
regardless of where located:

         (a)  all Receivables.

         (b)  all General Intangibles.

         (c)  all Documents.

         (d)  all Instruments.

         (e)  all Inventory.

         (f)  all Equipment.



                                      -1-
<PAGE>   28

         (g) All books and records (including customer lists, marketing
information, credit files, price lists, operating records, vendor and supplier
price lists, sales literature, computer software, computer hardware, computer
disks and tapes and other storage media, printouts and other materials and
records) of Debtor pertaining to any of the Collateral.

         (h) All moneys and property of any kind of Debtor in the possession or
under the control of Secured Party.

         (i) All Proceeds of any and all of the foregoing Collateral.

In each case, the foregoing shall be covered by this Agreement, whether Debtor's
ownership or other rights therein are presently held or hereafter acquired and
however Debtor's interests therein may arise or appear (whether by ownership,
security interest, claim or otherwise).

         4 This Financing Statement is presented for filing to the Secretary of
State of Texas.

                            FUTURE PETROLEUM CORPORATION
                             A Texas corporation


                            By: /s/ B. CARL PRICE
                               -------------------------------------
                                B. Carl Price, President



                                      -2-
<PAGE>   29

                               FINANCING STATEMENT

         This instrument is prepared and is intended to be a Financing Statement
complying with the formal requisites therefor as set forth in the Uniform
Commercial Code.

         1 The name and address of the Debtor ("Debtor") is:

                  BMC Development No. 1 Limited Partnership
                  c/o Future Petroleum Corporation
                  2351 West Northwest Highway
                  Dallas, Texas 75220
                  Attention: Carl Price

         2 The name and address of the secured parties ("Secured Party") are:

                  Energy Capital Investment Company PLC
                  c/o EnCap Investments L.C.
                  1100 Louisiana, Suite 3150
                  Houston, Texas 77002
                  Attention: Colin Nisbeth

                  EnCap Equity 1994 Limited Partnership
                  c/o EnCap Investments L.C.
                  1100 Louisiana, Suite 3150
                  Houston, Texas 77002
                  Attention: Colin Nisbeth

                  Gecko Booty 1994 I Limited Partnership
                  c/o EnCap Investments L.C.
                  1100 Louisiana, Suite 3150
                  Houston, Texas 77002
                  Attention: Colin Nisbeth

         3 This Financing Statement covers the following types or items of
property (collectively, the "Collateral"):

All right, title and interest of Debtor in and to any and all of the following
property, whether now owned or existing or hereafter acquired or arising and
regardless of where located:

         (a)  all Receivables.

         (b)  all General Intangibles.

         (c)  all Documents.

         (d)  all Instruments.

         (e)  all Inventory.

         (f)  all Equipment.



                                      -1-
<PAGE>   30

         (g) All books and records (including customer lists, marketing
information, credit files, price lists, operating records, vendor and supplier
price lists, sales literature, computer software, computer hardware, computer
disks and tapes and other storage media, printouts and other materials and
records) of Debtor pertaining to any of the Collateral.

         (h) All moneys and property of any kind of Debtor in the possession or
under the control of Secured Party.

         (i) All Proceeds of any and all of the foregoing Collateral.

In each case, the foregoing shall be covered by this Agreement, whether Debtor's
ownership or other rights therein are presently held or hereafter acquired and
however Debtor's interests therein may arise or appear (whether by ownership,
security interest, claim or otherwise).

         4 This Financing Statement is presented for filing to the Secretary of
State of Texas.

                            BMC DEVELOPMENT NO. 1 LIMITED PARTNERSHIP

                            By: Future Petroleum Corporation, general partner


                            By: /s/ B. CARL PRICE
                               -------------------------------------
                                B. Carl Price, President



                                      -2-
<PAGE>   31

                               FINANCING STATEMENT

         This instrument is prepared and is intended to be a Financing Statement
complying with the formal requisites therefor as set forth in the Uniform
Commercial Code.

         1 The name and address of the Debtor ("Debtor") is:

                  Future Acquisition 1995, Ltd.
                  c/o Future Petroleum Corporation
                  2351 West Northwest Highway
                  Dallas, Texas 75220
                  Attention: Carl Price

         2 The name and address of the secured parties ("Secured Party") are:

                  Energy Capital Investment Company PLC
                  c/o EnCap Investments L.C.
                  1100 Louisiana, Suite 3150
                  Houston, Texas 77002
                  Attention: Colin Nisbeth

                  EnCap Equity 1994 Limited Partnership
                  c/o EnCap Investments L.C.
                  1100 Louisiana, Suite 3150
                  Houston, Texas 77002
                  Attention: Colin Nisbeth

                  Gecko Booty 1994 I Limited Partnership
                  c/o EnCap Investments L.C.
                  1100 Louisiana, Suite 3150
                  Houston, Texas 77002
                  Attention: Colin Nisbeth

         3 This Financing Statement covers the following types or items of
property (collectively, the "Collateral"):

All right, title and interest of Debtor in and to any and all of the following
property, whether now owned or existing or hereafter acquired or arising and
regardless of where located:

         (a)  all Receivables.

         (b)  all General Intangibles.

         (c)  all Documents.

         (d)  all Instruments.

         (e)  all Inventory.

         (f)  all Equipment.



                                      -1-
<PAGE>   32

         (g) All books and records (including customer lists, marketing
information, credit files, price lists, operating records, vendor and supplier
price lists, sales literature, computer software, computer hardware, computer
disks and tapes and other storage media, printouts and other materials and
records) of Debtor pertaining to any of the Collateral.

         (h) All moneys and property of any kind of Debtor in the possession or
under the control of Secured Party.

         (i) All Proceeds of any and all of the foregoing Collateral.

In each case, the foregoing shall be covered by this Agreement, whether Debtor's
ownership or other rights therein are presently held or hereafter acquired and
however Debtor's interests therein may arise or appear (whether by ownership,
security interest, claim or otherwise).

         4 This Financing Statement is presented for filing to the Secretary of
State of Texas.

                            FUTURE ACQUISITION 1995, LTD.

                            By: Future Petroleum Corporation


                            By: /s/ B. CARL PRICE
                               -------------------------------------
                                B. Carl Price, President



                                      -2-